SEM is Search Engine Marketing. SEO is Search Engine Optimisation. SEM often involves paid search engine results: the ones coloured in at the top, or listed as Sponsored Links. SEM is often resorted to as easier than SEO, which involves getting to the top of natural or organic results.
However, it has been proven by researches that paid links do not get nearly as many hits as the top organic results.
But did you know the two are closely related? Paid advertisements should still be optimized for top placement amongst the results. And, although organic results will get more attention from visitors, the value of having your name right up there at the top of results from SEM should never be dismissed.
SEM should not be considered as in opposition to SEO. A carefully considered combination of the two is your best strategy for optimum visitor traffic and visibility.